Private use of a company car in Czechia — taxation for employees and directors

When a company gives an employee or a director a company car they may also use privately — for the commute home, at the weekend, on holiday — it is not an invisible perk. Under Czech law it is non-monetary income that is added to the wage and taxed just like money on the payslip. Many business owners underestimate this and only discover it during an audit or the annual tax reconciliation.

The rule is simple and has been settled for years. It does not matter how many kilometres you actually drive privately — what matters is that you are allowed to use the car privately. That is exactly why, alongside the tax add-back, the second key topic is the logbook, which separates business trips from private ones and decides who pays for fuel.

This overview explains how much is added to taxable income for an employee and for a director, what lower rates apply to electric and low-emission cars, and the role a properly kept logbook plays in all of it.

Private trips are non-monetary income — 1% of the input price per month

The basic rule is set out in Section 6(6) of Act No. 586/1992 Coll., on income taxes. If an employer provides an employee with a vehicle for both business and private use free of charge, 1% of the vehicle's input price is treated as their income for each calendar month, even a part-month. The input price is the price including VAT from which the car is depreciated — in other words, what the company actually paid for it.

This percentage is added to the gross wage and enters not only the tax base but also the assessment base for social security and health insurance contributions. The law also sets a floor: at least CZK 1,000 per month is added, even if 1% would come out lower. Example: for a car with an input price of CZK 600,000, CZK 6,000 is added to the employee's wage every month, on which they pay tax and contributions — regardless of whether they drive a hundred private kilometres or none at all.

Electric and low-emission cars: lower rates

The law favours greener vehicles and uses a lower percentage instead of 1%. For a zero-emission vehicle (electric or hydrogen car) only 0.25% of the input price is added, and for a low-emission vehicle emitting up to 50 g CO₂/km it is 0.5%. For 2026 the Income Tax Act has kept its own definition of a low-emission vehicle at the 50 g CO₂/km threshold, so plug-in hybrids retain the benefit.

The difference is noticeable. For the same CZK 600,000 car, the add-back is only CZK 1,500 for an electric car and CZK 3,000 for a low-emission one per month, instead of CZK 6,000. A lower add-back also means lower contributions, so a company electric car costs the employee significantly less in tax and contributions than a comparable combustion-engine car.

The same applies to a director

The rule does not concern employees only. A director's remuneration is likewise income from dependent activity under Section 6, so a company car provided to a director for private trips is taxed the same way — 1%, or 0.5% or 0.25% of the input price per month, added to their remuneration. If a director draws no remuneration, the car add-back alone can create an assessment base for contributions, which is worth discussing with an accountant in advance. We cover the taxation of a director's pay in more detail in our article on a director's remuneration in a Czech s.r.o. and how it is taxed.

Fuel and the logbook

One thing is not included in the 1% — fuel for private trips. The employee or director pays for that themselves, or reimburses the company. And this is exactly where the logbook comes in: it records individual trips, their purpose and distance, and the ratio of business to private kilometres determines what share of the fuel consumed falls on private use.

A properly kept logbook is also evidence for the tax authority and the basis for correctly setting the VAT deduction on a company car, where the proportion of private use is likewise reflected. It is best to fill in the records continuously, ideally right after each trip, not retrospectively before the accounts are closed.

When the car is used for business trips only

The add-back is tied solely to the possibility of private use. If a company has a vehicle used exclusively for business trips that employees may not take home or use privately, no 1% is added. In that case, however, it is doubly important to be able to prove it — through an internal vehicle-use policy and precisely the logbook, which shows that no private trips take place. The line between “business only” and “also private” is exactly what an audit asks about.

Conclusion

Private use of a company car is nothing complicated; it just needs to be thought through in advance: as standard, 1% of the input price is added each month (at least CZK 1,000), 0.5% for a low-emission car and only 0.25% for an electric one, for an employee and a director alike. The driver pays for private fuel themselves, and everything stands or falls on an honest logbook. Anyone who keeps their documents in order from the start — just like the companies in a carefully run house for just thirty companies — has one less thing to worry about.

Frequently asked questions

How much is added to taxable income for private use of a company car?

1% of the vehicle's input price including VAT for each month, even a part-month, at least CZK 1,000. The amount is added to the gross wage and is subject to income tax as well as social security and health insurance contributions. For an electric car the rate is 0.25% and for a low-emission car up to 50 g CO₂/km it is 0.5%.

Does the add-back apply to a director as well?

Yes. A director's remuneration is income from dependent activity under Section 6, so a company car provided to a director for private trips is taxed the same way as for an employee. 1% (or 0.5% or 0.25%) of the input price is added to their remuneration and enters the base for both tax and contributions.

Do I have to keep a logbook?

A logbook is not directly a condition for the 1% add-back, but in practice it is essential. It separates business and private kilometres, which determine how fuel costs are split — fuel is not included in the 1% and the driver pays for private trips themselves. It also serves as evidence for the tax authority and the basis for the VAT deduction.